Sushi Money

Is there a subtle change taking place in the direction of the markets, and maybe the economy?  I’ve noticed a few writers here and there that are looking ahead, rather than dwelling on the banking crisis and every negative event that may affect the economy.   During any overzealous expansion there’s going to be contraction.  But there’s still many who have jumped on the doom and gloom bandwagon and are still focusing on what’s “wrong” with everything.  

It’s pretty evident that we face some stark challenges right now.  Between housing, industry layoffs, lending woes, and energy and commodities prices, the American consumer is taking it on the chin.  I tend to be very supportive of our elected officials intentions, even if they don’t get very much accomplished at times.  But with escalting gas and grocery prices, I really wonder if everyone from the President on down really understands how these challenges are affecting families across the nation this year.

Certainly it’s not a typical year.  It’s an election year for the nation’s highest offices, and we’re going to continue to hear what’s “wrong” with the direction of the country for many more months.   But even with the challenges we face, I think smart money looks a little more forward than that, and plans for days of positive growth and opinion once again.

We’ve seen some forward thinking recently with strong upward moves in the markets in recent weeks.  Leading indicators have not been all bad and equity valuations in some areas have become so attractive that investors are looking for bargains and positioning funds for the years ahead.  Donald Luskin says the Recovery is Already Underway and that “the worst is over.”

“Industrial production was reported as rising 0.3% last month, when it was expected to have declined. That’s a key recession indicator ” and it’s just not indicating. The high-tech component of industrial production has been especially strong, currently at all-time highs.  And then there are the markets themselves. Since the panic bottom a month ago yesterday, the S&P 500 has returned 7.1%. The best-performing sectors have been financials, energy and materials, indicating that the credit crisis is mending and that fundamental forces of growth are strong.”

“The bears hang onto every little scrap of evidence coming out of the financial and housing sectors to bolster their case that we’re already in a recession and headed for a depression. Doesn’t any of this good news count for anything?”

Laura Rowley takes a more historical look referencing economic research that sees the current economic downturn as a normal response to a financial crisis.  While she indicates we may have some time still to get through it, long term investors should stay the course:

“What does history imply for individual investors, who are more worried than ever about making it through retirement? “If you’re there for the buy-and-hold, long-term view, it’s a very different world,” says Reinhart. “These booms and busts do happen, but unless you really invested very poorly you do have the ability to ride these things out.”

Of course if you’re facing great changes in your life such as trying to pay for the mortgage, looking for a new job, or looking at retirement sooner than later, then it’s hard to sit on the side of optimism right now.   But I think it’s important to be rational and pragmatic, as opposed to letting the stress of worry and fear of the unknown influence your life.

The media doesn’t help with all the catastrophic announcements of doom and chaos, and story after story of people going through hard times.   Is it really that bad for everyone?  No.  But it is bad for some people, and we empathize and try to help where we can, while doing our best to keep our own financial lives in order.

For those of us facing retirement in the short term, keeping the financial house in order may take more effort than we thought.   Laura Bruce from Bankrate.com provides a good overview of the retirement perspective in Retiring in a Bad Economy: Are You in Trouble?   While the intro is a little alarmist, it probably increases readership.  That’s actually a good thing because this article has some excellent insight for both younger and older workers.   The article focuses on the fear and concern that many people have while seeing the banking crisis or a possible recession unfold.  What is a typical reaction for most of us?  We either use our savings to get by, increase our savings if we can, or try to put some extra cash in our retirement accounts to help support us in case we need it.

“But many people don’t have the money needed to give them that cushion; whether due to a lack of income or financial planning. Juetten, who doesn’t require people to have a certain amount of money before he’ll take them on as clients, estimates that only about one in five of the people who come to see him have done a really good job of planning for retirement.”

“First, we deal with the human side. Fear and concern are normal. The news is all around us and it’s hard to ignore. People going into retirement are the ones who are most aware of their financial situation because all of a sudden it’s right in front of them. Second, we talk about the short-term cash needs and, third, we look at the portfolio.”

“If you haven’t done a good enough job preparing for retirement, your options are fairly limited. You can work longer, live on less or work in retirement.”

And that’s a tough pill to swallow.  As we get older, we may have less time to accumulate financial assets.  One troubling statistic shows that 401(k) loans are on the rise.  If more people are borrowing from their retirement plans while working, what are they going to do when it’s time for retirement?  Do you just throw in the towel and assume you’ll keep working?   While working longer is a constructive option, it’s important not to have a deafeatist attitude because there are things we can do.  Living on less is very important, as many of us are finding out with higher gas and grocery prices.   (I don’t know about you but we’re really cutting back in some areas, and we just aren’t splurging on some of the convenience items we may have purchased in the past).

But some of the biggest lessons that financial planners and clients have learned is to save enough money during the working years to provide necessary cash flow in times of trouble.  Some view this as saving for an emergency fund to support three years of living expenses- whether before or after retirement.  Does your 401(k) count as this emergency fund?  Nope.  Those are retirement funds.  We need to save money in other accounts to serve as that emergency fund. 

As we get close to retirement we may find ourselves increasing our savings and investments to provide a stream of cash flow that can support us if desired.  Many retirees don’t use the cash flow that their portfolio could provide, investing it back in the portfolio instead.  But if something does happen to challenge your ability to make ends meet, a portfolio that generates income can be the foundation that carries the day.  Getting there financially is what it’s all about. And that’s a lesson that younger workers should really take note of.

“Younger people who have time to save for retirement have an opportunity to learn from these economic cycles and avoid the frayed nerves that so many older people are experiencing.”

A lot of us look back 10-15 years and realize we could have done a lot more to increase our financial position.  Without beating ourselves up or giving in to fear however, we can also use that knowledge to make new goals and take positive, constructive steps to improve our financial futures.   We may not win the lottery or invent the next million-dollar gizmo, but with disciplined effort, we can patiently accumulate savings and investments that will help support a sound retirement. 

And there’s another realization that many are just waking up to:   As the nation goes tumbling through the economic briar patch, we’ve got to pull ourselves up and work our way out of the tangle.  Nobody else is going to do it for us.

Okay, let’s be honest. How many of us have little quirks or habits that we use to save money? I was thinking about this the other day while doing a cost-benefit analysis in my head over some purchase. Then I realized I do this everyday almost unconsciously. So I began to wonder- how “normal” is it to think of saving money in various ways as a routine habit or way of life? After all, many of our friends and acquaintances enjoy spending money and living like there’s no tomorrow.

For those of us interested in personal finance and growing our wealth, does frugality just naturally go along with our goals? Or is something we pursue and challenge ourselves about? Somehow I believe we develop our own financial knowledge and strategies because it meets the values that are important to us. And how many of us wish we learned these values, or lessons, at a far earlier time in our lives?

But do you know any people who don’t even seem to care about saving money? I’m not sure I could go that far, it’s more likely that some people are just not aware of why it’s so important, or that they are spending much more of their income than they should.

So after I thought about it a while, I realized I do a lot of things to try and save money. I say “try” because I may not always be saving money, but just believe I am. And I have various habits or quirks that to try and find ways to become more efficient financially. Maybe it’s a disease… the same one that had me running around changing lightbulbs the other day after realizing I didn’t finish all the bulbs in the house last year. By my accounting, it saves us $5-$10 a month on our electricity bill.

So here’s my short list of strategies for saving money at home. These are things I do, or we focus on as a family:

1. Installed and use programmable thermostats for the house… but I still fiddle with the thermostats everyday to optimize the settings if we don’t need the heat or cooling. I even shut doors/vents to rooms that we don’t use, and are colder in winter, and circulate the fans where possible in living spaces.
2. Installed 40 compact flourescent lightbulbs instead of using the traditional incandescent bulbs throughout the house.
3. When putting gas in the car I hold the pump hose up to drain as much gas out of the line as possible… if it’s possible!?
4. Try not to drive excessively fast, but try and maintain constant speeds (a little higher than Grandpa..), and I coast as much as possible, especially going downhill and between stoplights. Also saves on brake wear.
5. Try not to shop for groceries when we’re hungry. I’ve proven that I’ll buy all kinds of useless junk if I’m hungry! We use coupons if it fits our lifestyle, but don’t clip that many. We minimize junk foods, and pre-packaged processed meals.
6. Pay bills online for free instead of using stamps and checks if possible.
7. If we go out for fast food, I’ll order from the value or dollar menu, and often order water instead of soda. But in general we eat out a lot less these days. We splurge on dining out once or twice a month at a decent restaurant.
8. We buy groceries and dry goods in bulk where possible, especially if the item is on sale.
9. Make our own coffee in the morning; having coffee out is a rare treat.
10. Prepare brown bag lunches for work/school, instead of eating out.
11. Eat and stay healthy… avoid the doctor and look for alternative health ideas for common ailments.
12. Use the library for books and videos. Find free recreation and activities for the kids.
13. Use the least expensive cell phone, land-line telephone and internet service plans as possible. But we do have broadband internet- it makes life so much more pleasant. We also keep land-line telephone service because we live in a semi-rural area and it works during electricity outages, or else we’d ditch that too.
14. Avoid bank and credit card fees in all ways possible. Find another bank if the current one charges too many fees.
15. Cut the kids hair at home. Pets are also bathed and groomed at home. Not that kids and pets are the same mind you…
16. Carefully research larger purchases (greater than $50-$100). When ready to buy, we purchase quality items that will last. Often we’ll shop online after finding a lower price, and save on taxes as well.
17. Pay off credit cards each month unless financing a temporary item at very low rates, or 0%. Don’t carry a balance.
18. Do most of our cleaning, landscaping and auto maintenance needs at home when possible.
19. Grow a garden to eat our own vegetables.
20. Don’t shop for more clothing and shoes than absolutely necessary, and purchase items on sale.

Oh… one more I just realized. Use the same old computer until I can’t stand it anymore! I’m typing on my second laptop- the first lasted almost three years. This one has just passed two years and still going strong, but I would really like to get a bigger desktop… some day.

So what things do you do to save money? I’m sure there’s a lot more… does this seem normal to you, or do you live carefree and not worry about it? I’m not sure I’ll ever be able to do that…

It’s often been said that experience is the best teacher, and that’s a very appropriate axiom when it comes to managing money. Jonathan Hoenig from SmartMoney.com might agree in his article Trading, Not TV, Offers Best Investing Lessons. He makes an excellent point in terms of investing in the market and how learning to trade stocks can provide an understanding that we won’t get anywhere else. It’s a good read with some valuable insight, but it’s not for everybody. There are plenty of investors out there who have never set foot in the world of brokerage accounts, and don’t intend to. Many investors have a 401(k), Roth IRA, and a host of taxable mutual funds. Do they need a brokerage account? Not unless they want to trade stocks on their own.

Sometimes I think many of the Wall Street gurus think that trading in the stock market is a necessary practice for achieving wealth. Perhaps surprisingly it’s not- many people enjoy building a business and working at a career that provides long-term growth and opportunity. Many other people invest patiently without trading. Some folks think the market is just too complicated, and don’t want to risk any money trading. I can empathize with that, but at one point in my life I felt a strong desire to learn what trading is all about. My story is pretty much like Mr. Hoenig’s, except perhaps that I didn’t make as much money and don’t trade for a living now.

The conclusions I came to were born on the winding road of countless gains and losses, and the realization that, for me, trading stocks is no way to make a living! Naturally, if you are a professional or have a passion for trading, then more power to you. But to be quite honest, I realized that unless I was going to focus on trading full-time, or become a professional in the investment and trading world, I really had no business being there. It takes a lot of time and focus to get it right, and you can’t be very successful on a part-time schedule. Maybe there are exceptions- I’d love to hear about them. Trading just doesn’t get me there… but saving and investing does!

I would offer that most of us need to be a little more patient and disciplined over time, and instead of trading- focus on investing. Once I accepted that I wasn’t going to spend a lot of time trading stocks, I became a long-term investor, and focused on companies, stocks and mutual funds that would help grow my portfolio. Much of that means dividend paying stocks that return something for the risk I take when holding them over time. I also became someone who looked for opportunities to save money in every facet of life. Little costs add up to big dollars over the years. Something that David Bach calls “The Latte Factor” or how People Magazine says “A Latte spurned is a fortune earned!” Don’t see it? Let’s say you give up three latte’s per week at $3.50 each. That’s $10.50 per week, or $42 per month. Or if you cut back somewhere else and save $20 per week, or $80 per month? Take a look at a comparison:

That’s just from some extra savings each week, with monthly compounded interest. Maybe it looks like a paltry sum of money to some people, but it’s just a minor example. Imagine what we can achieve by saving more! It also shows how a little more interest can go a long way. And it presents an opportunity for us to look for saving money in everything we do over time. At home, at the grocery store, at the bank, when using credit cards, etc, etc. There are countless ways to become more frugal, efficient, thrifty… whatever you want to call it. Just doing it is the hard part, but once you get started- it becomes kind of fun.

Overall I think we can achieve a balance between needs and wants… taking care of ourselves and our families, treating ourself to good things now and then, and being proud of our savings and investing habits over the years. We can end up with a lot more than we ever dreamed of, if we just do our part each week. And by the way, that axiom about getting experience? Well, experience is pretty darn important, no question about it. But it’s not the only place we can learn. Learning from the mistakes and wisdom of others is often more important. There’s a quote I like from Benjamin Franklin, someone who long recognized the value of money throughout his life:

“Experience keeps a dear school, but fools will learn in no other.”

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     End of the week, and almost the end of the summer of ‘07.   I think we’re getting back to normal, whatever that means… it seems like the credit crisis and banking turmoil is settling down.  And it feels like it’s time to get back to basics.  I’ve come to two primary realizations this month:  

     1) I can save and/or invest more money over time than I have been- I can do better!   So I’ve started two new savings allottments.  One to a money market fund at Vanguard, and the other a high-yield savings account with ING.  I looked at my saving efforts and realized I’m not doing enough!  For my Roth IRA investment each year, I like to have it available for either lump-sum investment at the beginning of the year, or as partial investments throughout the year.  So I hold my savings in a money market or high-yield account until that time.  I’ve got that one covered so far.  The same goes for my brokerage account.  Just save money over time until the right opportunity presents itself.   After I have that emergency fund saved up… 3-6 months of necessary expenses.  Oh, and after I keep that unsecured credit card debt paid off.  But I can do better… and I’m starting today!

     What’s the second realization?   It is the more important one… something we have all long known and worked “around” but are sometimes hesitant to really acknowledge.  But I’m going on the record because it’s important to me.

   2)  While I work hard to save and plan for the future, I will not sacrifice the time I have today, wherever possible, to enjoy life and those around me.  Nothing magical, nothing new. But a statement of firm conviction.  I will not feel guilty about doing so either… sometimes other people think we’re not working hard enough, or doing what they think is necessary.  You know what?  They have their own life… our life is OURS!  Do with it as you see best!   I have long felt this way, but I have not long lived this way.   That is more recent… perhaps we reach a point in our life where it really begins to mean something.   For me, it speaks to family and doing things together, as well as working towards dreams and goals we really desire.  For all of that… I can do better!

     And here too is what I’m talking about.   For me this is a wonderful example that serves to help us remember to cherish the days we have.   A Carnegie-Mellon University Professor named Randy Pausch, who gives his thoughts on life, before his life runs out.  Thank you, Paul.  From the article by Jeff Zaslow of the WSJ:

     After a long weekend, it’s time for a review of some Carnivals posted over the past few days including a super Carnival of Personal Finance: NSA Edition over at Advanced Personal Finance.   Fire Finance hosted a wonderful lineup with the Carnival of Money Stories last week, and an eclectic mix of articles was provided at the Carnival of Homeowners, hosted by Homeowners Insurance Lowdown.  I really enjoy reading the contributions each week at the various carnivals-there’s always something to learn! 

     We spent a nice Labor Day weekend camping and relaxing at a nearby lake.  Instead of spending a fortune, the nightly costs for our campsite were less than $18, so all we really paid for was food and fuel for driving there.  Of course we packed most of our food in advance, cooked out quite a bit, and even caught enough fish for dinner Sunday night.  I would say it was a frugal trip, but the fuel costs really add up.  However it was a memorable trip, and something not measured in terms of money, but rather the time spent with family.  I could hardly believe how many people were on the road! 

A busy week at home and with classes.  But school’s out for the kids and summer is approaching quickly!  Lots of chores to catch up on taking care of the house as well.  What do you do during the summer months?  We made a list the other night and gave up after sixty task items… ugh!  But you’ve got to start somewhere.  I see painting and weeding in my future, along with lots of grass cutting.  I cut about 4-5 acres every 10 days, and more if it rains a lot.  I actually enjoy it… until about July.  Then I’m ready for a break and fortunately the weather cooperates as the rain slows down and the grass begins to go dormant for the summer.  Watching the markets lately I’m wondering if they too will go “dormant” soon…  returns have been pretty nice so far this year, but as May draws to a close I wouldn’t be surprised to see the markets take a break.  As summer begins many families will be planning ahead for vacations and school in the fall.  The election cycle will pick up steam as we approach fall, and 2008 will be a busy year.  I’m not sure I’m ready for the political media circus, and it’s hard to believe we’re starting again.  But I’ll keep plugging away on saving and investing, and the slow accumulation for our 529 fund.  After Congress made the 529 plan legislation permanent last year, there is almost no reason for a family not to fund a 529 for college education savings.  I started one in 2002, and it has done remarkably well with an average of 16% gains over the past five years.  It helped to have a good “down” year of putting money in the fund early before the market roared back in 2003 as well.   My 6-year old doesn’t know much about money or investing yet, but we’re going to start learning a lot more together this year.  I would love to start a Roth IRA for him at some point as well- if he can place some earnings in an IRA while young, and keep at it through the years, he could be so far ahead of most of us it would be amazing!  I like to think of investing in terms of generations.  Certainly achieving financial security during our lifetime, and for our retirement years is a primary goal, but at some point I would like to accumulate enough to leave a financial legacy.  In what form?  Well, both for charitable purposes as well as family goals.  Wouldn’t it be something to leave enough money to ones heirs that it could continue to grow over decades, providing some assistance for children, grandchildren and even great grandchildren?  I have no illusions of fame or historical significance… but doing something for family in the years ahead would be pretty cool.  But it’s time to focus on the present… tomorrow I’ll get a little class work accomplished… and maybe even cut some grass.  Money and investing is kind of like taking care of the yard to me… the blades of grass simply grow.  Sometimes bare spots appear, and weeds take over.  But we plant more grass seed, and try to minimize the weeds.  With care the blades of grass multiply and continue growing, providing a cool foundation to enjoy over the years.  The grass grows faster at times with good weather and a little rain, and then slower when it’s hot and dry, going dormant to all appearances.  But the roots are there, waiting for better climate… and then zoom! it begins to grow again, sometimes in great leaps.  If we take care of our financial assets, they too will continue growing… sometimes in great leaps, and sometimes slowly, even leaving bare spots at times.  But saving and investing consistently over time will lead to a foundation of greener pastures in the years ahead.

I like Ben Stein.  He has a diverse array of talents… but the greatest ones?  I think they revolve around a genuine desire to help people succeed by sharing the lessons he has learned, and continues to learn, during his life.   His article titled A Few Lessons from the Road speaks honestly about the challenges we face as we grow old, or how jobs and the economy swing in various directions leaving many to make hard choices about money and lifestyles. 

I think he speaks more about facing the challenges in our lives by doing something… taking action now to promote change in our lives, being adaptable to other forces of change, and working to achieve a positive future.  The greatest challenge we may face?  Saving enough money for our retirement years… and trying to stay healthy to enjoy them.  I don’t exercise formally nearly enough, but I do a great deal of physical labor outdoors that, hopefully, makes up for some of it.  I seem to spend more mental energy writing, planning and completing classes.  But I believe life is about balance… and as Ben says, flexibility. 

One of my father’s friends many years ago gave me some advice.  He said to “Make uncertainty your friend.”   I’ve always appreciated those words, and in times of personal or professional challenge I have tried to view uncertainty as an opportunity.  I think we can embrace uncertainty with the awareness that we don’t have all the answers, and that’s okay.  What we do have is the ability to do things and promote change… a little at a time, and sometimes all at once.  Often the hardest part is finding the courage and discipline within to do so.  Just like Ben speaks of with saving money… start now, a little at a time, and keep after it!

“Nothing will ever be achieved if all objections must first be removed.”  

                                                                                                                         Ralph Waldo Emerson

Here’s my list for how we save money at home. It’s an ever-changing process, and I continue to look for ways to maximize value, and minimize expense. Perhaps it’s a lifestyle choice as well. But if we save $10 a week, or $40 a month, or close to $500 a year by making good choices? That $500 invested (one time) and earning a meager 7% over 20 years adds up to over $2000… saving $40 a month for 20 years is $21,240!  At 10% interest, that one-time $500 grows to more than $3600, and saving $40 per month grows to over $32,000!  Imagine making wise choices that save you $100 per month or $1200 per year. Over 20 years, saving $1200 per year, at 7% that money compounds to over $52,000. And with a 10% return, an initial one-time $1200 investment will return almost $9000 for retirement needs, or $76,000 if saving $1200 each year! It’s amazing how money can add up… and that’s why everybody wants your pennies. I once read an article where the author debated whether picking up pennies when you saw them was worth the effort, with the conclusion that it really wasn’t. I disagree… not so much because the pennies add up to any tangible savings, but more importantly for the mindset. I believe it’s the little things that count… a mindset of abundance, and of respecting and valuing how money can serve a purpose that will foster effective choices throughout our lives. Money is a tool… and I hope to have enough tools in the bag during my life to take care of needs as well as allowing more choices over time.

1. Shopping for groceries: Shop when you are not hungry! It really works… if you’re not hungry, many foods and grocery items will simply not be as appealing at the moment. You are more likely to buy only what you need. Don’t stock up on groceries “just because” but have a good reason to do so. I like nothing better than a full pantry, but how often do we go rumaging around for something while we wonder why so many cans and jars go unused? They may eventually be used, but that’s just money sitting in there… kind of like stuffing money in the mattress while earning no interest. I think a balance can be found between essentials and necessary items, and other more common food items. Now I will also say that if I lived on the southern coastal areas during hurricane season, I might stock up on more essential items… especially water and canned goods. For some people, the security of having food in the house ready to use outweighs any misgivings about buying too much at one time. We clip coupons… sometimes. We try to buy only what we need, and use the coupons that serve the same purpose.

2. Costco and Wal-Mart: I love to shop at the big-box stores as a primary money-saving method, but I also like to see the diversity of products they have each week. Costco especially can provide some excellent deals on groceries and bulk foods. They don’t have everything, but what they do have is usually at a pretty decent price. The problem with Costco and the Super Wal-Mart centers, Sam’s Club, etc, is that you can get in the habit of buying too much, and buying things on impulse because it looks like such a great buy. Often it is just that- great prices, but you may not need it. If you are going to shop at these stores, it is best to do so carefully. Make a list of what you need and want, and stick to it. How many times have we bought things on impulse and later wondered why we did so? But Costco is a favorite of mine- where else can you get an extra-large roasted chicken for $4.99? The Costco chickens tend to be larger than the typical roasted chickens at the grocery stores. If you find things you use frequently like condiments, bathroom supplies and shampoo, vitamins, paper towels, various vegetables, and pet food, Costco can offer excellent prices. I don’t shop at Sam’s Club, but I imagine they have similar deals and price levels. If you shop wisely, you can save a lot of money over time.

3. Auto fuel and service: When do you fill up your car? Almost on empty? At a quarter tank? A half tank? Again, if I lived in an area prone to storms or fuel shortages, I might fill up more frequently. But I try to use the fuel in the car, at least towards a quarter tank, for two reasons. The first is that if I’m always “topping off” then there is some degree of older fuel that is always in the car, slowly aging with the blend of the new fuel. With today’s ethanol blends, I think it’s important to use more of the fuel rather than let it age, and potentially develop water in the tank, etc. The second reason is that storing fuel in the tank repeatedly is like keeping money in the mattress again… it never gets spent. I paid for the fuel- so I should probably use it… then buy more when I need it. But honestly, I do go back and forth- depending on fuel prices. I tend to use much more of the tank when prices are lower or stable. When prices are rising, I’ve noticed I tend to top off more often. By the way, Costco has terrific prices on tires, as does Wal-Mart. Costco runs sales quarterly on Michelin and other top brands where you can save $60 off a set of four tires. Plus they will service and rotate them for life! For oil changes, I’m a Jiffy Lube fan. Similar stores offer decent prices as well, but you can get a complete oil change for between $19 to $25 dollars, sometimes lower with coupons. I used to change my own oil, but it’s messy and doesn’t save much money anymore, especially as contrasted with the time you spend doing it. But don’t let them do anything else to your car unless you really need it, because that’s where the costs add up. If you need an air cleaner- get it yourself at the parts store or Wal-Mart. Windshield wipers at Wal-Mart. Change light bulbs yourself… my wife once paid $10 to have a license plate lightbulb replaced. For an .89 cent lightbulb!

4. Dining out on fast food: There are obviously tons of choices and preferences in the fast food arena. I try to minimize how often I eat fast food in the first place, both for health reasons and cost. Value meals aren’t cheap- heck, a whole roasted chicken costs as much, or less, than a typical value meal! But we still go out for fast food… let’s face it, it’s fun! Yet I’ve found I can choose wisely and save money. At McDonalds for example, you can choose a “Big and Tasty” for $1.00 and a “Hugo” large drink for .89 cents. Leave off the mayonnaise and you save tons of calories. I don’t need the french fries health wise, so that’s an economical meal. The “Big and Tasty” is a decent burger, when you compare a hamburger at Sonic is $2.39! Once upon a time Sonic offered three hamburgers for a dollar on special in small towns across the midwest. No more… now they’re expensive. Hardees also offers regular burgers for .89 cents, although they are smaller. Burger Kind too. Taco Bell offers some great prices on their value meals and $1.00 menu items. I gave up on KFC years ago because the prices were too high for the quality of food, but lately they have reinvented their menus and the prices are much better. And who doesn’t love Pizza? One of our favorites is Papa Murphy’s. It’s “take-and-bake” but excellent pizza at great prices. You can usually get an enormous cheese pizza for around $8 and then add meat, veggies, onions and more at home. We usually only eat pizza when the prices are right, and even Costco has decent pizza at an excellent price.

5. Bag lunch for the kids! Eating at school can be pretty expensive over time, and probably not as healthy. I try to explain to the young one that when we save money by fixing lunches at home, we can use that money for other things for the family… a movie now and then, McDonald’s Happy Meals at times, etc. I believe allowing the kids to understand the contrasts between prices and behaviors will help them learn about money, and about making wise choices. With their allowance, if they want to spend some at school, then that’s fine. But I try to monitor the spending there as well.

6. Banking: If you’re paying fees for checking and savings, then you should find a new bank. Loyalty is fine, but don’t stay with your current bank because it seems burdensome to make the change. It may take a few signatures, but you can change your direct deposit and allotments very easily. Banks are competing for your business- and there are many choices available that offer free services these days. I don’t allow them to nickel and dime me at every turn either- if there’s a fee for something, I call and question it. Many of the larger banks will refund the money if it’s an uncommon charge. We also pay bills online primarily. Saves time and money and works just fine.

7. Cell phone and internet use: Do you really need the number of minutes you pay for? If so, then great. What about all the neat services, ring-tones, web access, etc? Those services really add up in cost, and if you’re not using them, then get rid of them! We have a “family plan” at the minimum level, and barely use our minutes. Our plan is up next month, and it may be time to shop for individual plans at a lower price. We live about 45 minutes outside a metropolitan area, and there’s only a few plans that have decent coverage here, so our choices are limited. But between internet access, land-line telephone and cell phone plans, the costs really add up. We don’t use the latest and greatest phones, but they work just fine.

8. Cable TV: I used to be a cable TV addict… surfed like a pro and loved the choices. We moved here and had the opportunity to get satellite TV. We put up a roof antenna instead and get about 7 different channels- all the major networks including PBS. That saves us from $45 to $70 per month based on what we were paying before. And you know what? I don’t really miss it… and heck, I don’t have time to watch a lot of TV anyway. Well, okay- I miss some of the sports networks and news programs! But I’d rather have the savings.

9. Energy Costs: I think this is a huge area where many can see savings over the year. I love to be comfortable in winter and summer… but I am also constantly monitoring our energy usage. We use electric, propane, wood and pellets. The electric is the mainstay of our energy usage. Both electric and propane are controlled by 7-day programmable thermostats. I prefer the Hunter-Douglas brands. These systems will allow you 4 daily settings, and can be manually changed quite easily, just bumping the temperature up and down. But our energy saving mode is primarily at night. The thermostat automatically turns the heat way down in winter, or keeps the a/c set much higher in summer. We save hundreds of dollars each year because of these two $60 dollar thermostats. For propane especially, I turn the system way down in winter. When it’s cooler- we wear a sweatshirt. When it’s warmer, wear a t-shirt. We don’t skimp or live uncomfortably, but we work to use energy wisely. I refill the propane tank in late spring or summer when the costs are typically lowest. We also use many flourescent energy-saving bulbs throughout the house, and try to keep lights always turned off when not in use. I turn the computers off at night also… have been doing so for over 10 years with various brands and they work just fine. I’m sure many of these are common habits for most people, but I was surprised that many others don’t give it a thought. We had neighbors a while back that lived in a 4200+ square foot two-story house. Each floor of their house had the old-fashioned “dial” thermostats with no programmable functions. They left it on a comfortable setting day in, day out, whether they were there or not. They would be gone for several days on trips and their air conditioning would be running constantly. Well, it’s their house and income, more power to them… literally.

10. Mutual funds and Stock trading: Find a good discount broker if you’re going to trade as a hobby! Those costs add up to incredible amounts of money over time. Scottrade is my favorite discount broker- just there for the times I want to make a quick trade, which is not very often. I’m a buy-and-hold long-term kind of guy. The fees and charges can really add up with brokers and mutual fund holders. Do you know your mutual fund’s expense ratios? Have you compared them to other funds or institutions? Vanguard is my favorite… my current total expense ratio at Vanguard is less than 0.6%. Not hard to do because their costs are very low compared to the averages. But you may have a preferred institution or fund. You can still hold many of those through a low-cost company like Vanguard, and you can transfer them there as well. DRIP investing is a good method that many use to own dividend-paying stocks at low cost. But the administrative headache can be burdensome over time. I prefer a single good broker to hold, and reinvest, my dividends from stock holdings. Scottrade doesn’t typically reinvest dividends, so I don’t use them for that.

Many other ways to save money… I try to look for them each day. What other things do you do? The list could go on and on… I think it’s both a challenge, and I enjoy being more frugal at times. We don’t always succeed, but have a budget that seems to work. And with the cost of fuel prices, we probably will be doing more things at home!